How Does a Non-Profit Make Money?
If you volunteer at, want to start, or improve a nonprofit organization, you must find an answer to one important question at the heart of the mission – how does a non-profit make money?
Finding stable funding for your non-profit activities can be challenging but not impossible for anyone who’s already set out to turn a nonprofit into a powerful force for change.
There are multiple solutions to significantly increase your chances of success. Rest assured that we’ll be right beside you with our expert advice and profitable ideas.
What Is a Nonprofit Organization?
As the name suggests – a non-profit is an organization that’s set a goal other than generating profit.
Whether rescuing kittens from the street or saving the planet from plastic waste, nonprofits unite countless activists and volunteers.
Although nonprofit organizations aren’t specifically created for the purpose of generating income, they still need ways to earn money to organize fundraising campaigns, pay fair compensation to their staff and contractors, and cover all other expenses tied to their mission.
The good news is that there are countless ways to make sure your nonprofit’s income is stable and growing.
Non-profit vs For-Profit Business
To keep it simple – a for-profit benefits private interests, while a non-profit benefits a cause.
Although the goals often differ, practices frequently overlap because both non-profit and for-profit businesses require funds to function.
This table further clarifies the main differences and similarities between these two types of organizations:
| Non-profits | For-profit | |
|---|---|---|
| Goal | To aid a social or charitable cause. | To earn money and maximize profit. |
| Source of revenue | Donations, memberships, subscriptions, grants, sales of products and services. | Commercial activities, investments, memberships, subscriptions. |
| Profit distribution | Funding activities tied to the nonprofit's mission, employee salaries, and operational expenses. | Shareholder payouts, reinvesting back into the business, employee salaries, and operational expenses. |
| Goal | |
|---|---|
| Non-profit | To aid a social or charitable cause. |
| For-profit | To earn money and maximize profit. |
| Source of revenue | |
| Non-profit | Donations, memberships, subscriptions, grants, sales of products and services. |
| For-profit | Commercial activities, investments, memberships, subscriptions. |
| Profit distribution | |
| Non-profit | Funding activities tied to the nonprofit's mission, employee salaries, and operational expenses. |
| For-profit | Shareholder payouts, reinvesting back into the business, employee salaries, and operational expenses. |
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How Do Non-profit Organizations Make Money?
Unlike for-profit organizations, your income options are limited by default. That said, there are multiple ways to enable various income streams to cover your expenses and fund nonprofit activities.
Many nonprofits make money from one or many of the following activities.
Selling Products
Your nonprofit can gain from selling products that align with your mission – who wouldn’t want to wear something great that’s benefited a nonprofit charity?
Place your nonprofit’s logo or slogan on merch like t-shirts, totes, and mugs. Consider offering eco-friendly products that your supporters can buy and wear to spread awareness of your cause in style.
Check out customizable products in our Product Catalog to find what works best for your nonprofit. Set profitable margins and start making money for your nonprofit by setting up shop with Printify today.
Pro tip
Go over our review of dropshipping profit margins to develop a pricing strategy that provides a steady nonprofit income.
Offering Services
Just like for-profits, nonprofits make money from offering their time and resources through various services related to their mission.
These can be educational workshops or consulting services that provide steady revenue streams while promoting your nonprofit cause. Consult other board members and offer services to individuals or organizations, depending on what fits your nonprofit best.
Fundraising Events
Fundraising is one of the most popular ways nonprofits make money and expand their list of supporters.
Sponsor and host fundraising activities from on-site gatherings to online crowdfunding. As always, make sure all of these activities align with your nonprofit’s objectives.
Success depends on reaching the right people with the right message, so you’ll need a plan and an established marketing strategy.
Pro tip
To find popular fundraising ideas and some much-needed inspiration, check out our blog posts on Top 15 Fundraising Ideas and T-Shirt Fundraising Ideas.
Donations
Unlike for-profit businesses, public charities and similar organizations often rely on donations to fund basic operations and larger projects.
Collect donations through fundraising events, provide donation boxes at your location, and establish easily accessible online donation options like a Donate button on your website.
Although dependence on donations is often seen as unreliable, the last three years have brought a 42% increase in online charitable giving. This shows the promising potential of nonprofits making money through donations.
Memberships
Your supporters may prefer to pay a membership fee rather than offer volunteer hours. So, why not provide them with a membership program?
Consider offering memberships with different levels of support, each offering its own benefits and privileges to inspire more people to sign up.
This can start with access to a members-only newsletter, a digital or printed thank you card, then increase to exclusive merch and VIP event passes.
To simplify running a successful membership program, consider using membership management software or services like DonorBox or WildApricot.
Grants
Due to the large sums of money involved and the competitive application process, qualifying for a grant is one of the hardest ways to gain funding for your nonprofit. However, it’s undoubtedly worth it.
Apply for grants from the government or private foundations to carry out various projects that align with your nonprofit’s goals and mission.
Consider applying for Google Ads Grants, and if you’re in the US, the federal government provides a handy search tool to simplify finding grants that best fit your nonprofit organization.
Corporate Sponsorships
Gaining corporate sponsorships can be challenging, but they could provide stable funding for non-profit activities through long-term partnerships.
Establishing strategic relationships with businesses that reflect your values takes dedication, effort, and a deep understanding of the other party’s goals and expectations. You’ll need to build a compelling sales pitch, showing what they’ll gain and achieve from sponsoring your nonprofit.
What Are the Main Expenses of a Non-profit Organization?
Expenses vary depending on the nonprofit organization’s size, scope, and mission, but most nonprofits allocate their funds in a few common areas.
From paid training to fundraising, be sure to distribute your earnings in a way that helps you reach your goals.
Operating Costs
Reserve a set sum of money to cover the essential operating expenses that keep your nonprofit running smoothly. This means covering rent for office space, property taxes, utilities, technology, and day-to-day supplies.
An essential part of your operational expenses will go towards marketing, enabling you to gain funding from social media campaigns, email newsletters, and strategic partnerships with corporate sponsors.
Pro tip
Focus on creating quality content through blog entries, videos, and infographics to showcase your organization's impact and attract donors and future members. Check out our marketing hints and tricks to find the best ideas.
Organizing Fundraising
Setting money aside for effective fundraising is important to sustain your organization’s programs and initiatives.
Finding the right approach for your nonprofit might seem challenging at first, but there are many options, including:
- Individual donations – mostly small sums of money given by individual donors.
- Organizing events – online or offline fundraising, often advertised on social media.
- Partnerships – collaborations with one or many businesses that align with your cause.
Don’t be afraid to approach supporters, potential corporate donors, and even people passing by with your message.
Staff Salaries
The truth of the matter is that investing in a dedicated team of enthusiasts is sure to lead your nonprofit business to success.
Although a fully paid staff might be something that’s further down the road, especially if your nonprofit business is new, it’s an important option to consider when the opportunity arises.
Make sure to offer reasonable compensation to your nonprofit’s staff members since they work tirelessly to drive your organization forward. In addition to salaries, provide ongoing training and professional development opportunities to keep your nonprofit competitive and energized.
Impactful Campaigns
Whatever you do, always keep the big picture in mind. Evaluating the impact of your programs and campaigns will place you one step closer to reaching your goals.
Remember that you need funding to create positive change and leave a lasting impact on the world. The more funding you get, the better your chances of maximizing your nonprofit’s impact.
Go through your planned expenses and distribute your funds with care to offset program costs and save money while organizing events, hiring professionals, and running fundraising campaigns.
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Nonprofit Organizations and the Tax-Exempt Status
Many nonprofit organizations receive tax-exempt status from government agencies in countries where they hold operations.
In the United States, a tax exemption is issued by the Internal Revenue Service.
To qualify, you’ll need to meet the conditions set out in the Internal Revenue Code section 501(c)(3). But before taking a deep dive into tax regulations, make sure your nonprofit meets the following conditions:
- It’s a charitable, scientific, literary, educational, or religious organization.
- Created for the benefit of public interests.
- Has a democratically-elected governing body.
- Has clear rules outlining the nonprofit’s purpose and its operational framework.
If you register a nonprofit in the US and meet all of the requirements set out by the IRS, you’ll receive a status that provides an exemption from federal taxes and various tax deductions.
When your nonprofit makes money from unrelated activities that aren’t directly tied to your mission, you’ll still need to pay taxes. In this case, you’ll deal with the unrelated business income tax.
File form 990-T annually to maintain your tax-exempt status if you earn $1,000 in gross income from unrelated business activities.
You’ll also need to pay the estimated tax if you anticipate the tax to reach or go over $500 in the span of a year.
Unrelated business income regulations may differ per country, so you’ll need to check the rules and regulations of your specific country of operation.
How Does a Non-profit Make Money With Print on Demand?
Now that you’ve learned how to make money as a non-profit – let’s start making money by selling custom merch with Printify.
Sign Up
Unlike drafting a nonprofit mission statement or paying taxes, opening an account on Printify only takes a few clicks, and most importantly – using Printify is free.
Enter your email and create a password or sign in with your Gmail account to gain access to our products and services.
Create Custom Products
Check out all the categories relevant to your nonprofit in our Product Catalog, with over 850 customizable products to choose from.
Use our Mockup Generator to upload or create your own designs – we offer free graphics, a text editor with more than 100 fonts, plus Shutterstock integration. Take inspiration from our blog, T-Shirts for a Cause, and remember to upload your nonprofit logo or message to the merch.
Decide Where to Sell
Order in bulk to sell merchandise at your location or during fundraising activities. Alternatively, open a store on an eCommerce marketplace or platform.
Start selling products fast through the Printify Pop-Up Store, or check out our automated integrations, including some of today’s most popular sales channels.
Promote Your Products
It’s time for the most important step – start selling merchandise!
Test out products and check that your nonprofit’s logo prints meet your standard. Go to the top of your Printify dashboard → Orders → Create order → Sample.
Promote your merchandise through various channels such as your website, social media platforms, email newsletters, and on-site events.
Engage with your community by encouraging them to share photos of themselves using or wearing your products, and consider running contests or merch giveaways to grow your following.
Pro tip
Take a look at our insider marketing tips on driving traffic to your store.
Final Thoughts
Funding is the core of all successful nonprofit organizations. From membership fees to individual donations and government grants, remember that each contribution counts towards supporting your cause.
Gaining and distributing earned income with methods that align with your nonprofit’s values will support financial sustainability, allowing you to grow your organization and reach closer to achieving your goals.
With Printify, you can pave the way for a better future. One filled with hope, compassion, and custom-printed slogan t-shirts – start your journey today.
FAQ
Do nonprofits actually make a profit?
Non-profit organizations don’t make a profit in the traditional sense, as their primary goal is to create a positive impact in society, not generate revenue.
Funds are typically raised through various activities like donations, grants, membership fees, and merch sales. They’re then used to support the organization’s mission and activities rather than distributing profits to board members or shareholders.
How to get funding for a non-profit?
Explore profitable avenues to raise funds that go beyond traditional donations. Consider activities like selling custom merchandise through Printify, setting up a membership program, applying for grants, and approaching local businesses to form corporate sponsorships.
You can secure stable funding for your nonprofit by diversifying your revenue streams.
What are 501(c)(3) organizations?
A 501(c)(3) organization is a specific type of nonprofit in the US that qualifies for tax-exempt status by the IRS.
Most commonly, it’s a charitable, scientific, literary, educational, or religious organization that benefits society instead of individual interests.
How do non-profit business owners get paid?
That depends on the structure of your nonprofit and what you’re tasked to do, but most commonly – you don’t.
Most of the money raised or earned needs to go towards fulfilling your nonprofit’s mission. It pays for relevant day-to-day expenses, offers reasonable compensation to your staff, and takes care of funding and hosting events and other projects and initiatives.
That said, there are instances where nonprofit founders go beyond a seat on the board of directors and get hired to work for the nonprofit in a leadership role.
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Written by
Vita Stevens
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2 comments
I LIKE IT.It is an eye opening for begginers. it covers all concerns and therefore complete.
Hi there,
We are glad to hear that!:)